Skip to content

    Varun Beverages Limited

    VBLGood
    Fast Moving Consumer Goods·3 Feb 2026
    Management Summary

    Varun Beverages navigated a challenging CY2025 marked by unprecedented rainfall impacting the peak India season, yet delivered 7.9% volume growth and maintained margins near all-time highs. Q4 showed meaningful recovery with 10%+ volume growth. With 40-45% capacity added over two years largely unutilized, the Twizza acquisition in South Africa, and new product launches (energy drinks, Nimbooz Jeera), management is confident of double-digit India volume growth in CY2026 if weather normalizes.

    Highlights

    8

    • CY2025 consolidated volumes grew 7.9% to 1,213.1 million cases; revenue up 8.4% to Rs 216,854 million

    • EBITDA grew 7.2% to Rs 50,494 million; EBITDA margin at 23.3% vs 23.5% in CY2024

    • PAT grew 16.2% to Rs 30,620 million driven by lower finance costs and higher other income

    • Q4 volumes accelerated to 10.2% growth (India 10.5%, International 10%)

    • India business remained net debt-free with free cash of ~Rs 12,250 million; consolidated net debt near zero at Rs 256 million

    • Rs 45,000 million CAPEX capitalized in CY2025 including 4 greenfield India plants; 40-45% capacity added over last 2 years

    • Snacks revenue at ~Rs 340 crores in CY2025; Twizza acquisition in South Africa announced for capacity expansion

    • CRISIL upgraded long-term rating to AAA/stable

    Concerns

    1

    • Weather dependence remains high for peak season performance

    What Changed2

    vs Q4 FY26

    Risks discussed3 → 4 (+1)Q&A highlights8 → 3 (-5)

    Key financials

    Single quarter

    08 metrics
    1. 01Revenue (CY2025)2,16,854 Mn+8.4%YoY
    2. 02Consolidated Volumes (CY2025)1,213.1 Mn+7.9%YoY
    3. 03EBITDA (CY2025)50,494 Mn+7.2%YoY
    4. 04EBITDA Margin (CY2025)23.3%
    5. 05PAT (CY2025)30,620 Mn+16.2%YoY

    Segment breakdown

    Volume Mix (CY2025)
    73.9% CSD20.2% Packaged Drinking Water5.9% NCB
    India Business
    26% EBITDA Margin (Standalone)12,250 Mn Free Cash
    List

    Guidance & targets

    3
    CategoryTargetPriority
    Margins
    Consolidated EBITDA Margin
    Maintain close to current levels (~23%); formal guidance 21%+
    		High
    Margins
    International Margins
    Move closer to India margins over next couple of years
    		Medium
    Inorganic
    Snacks Revenue
    Close to $100 million business
    		Medium

    Risks & concerns

    6
    RiskSeverity

    Volume-value gap may persist with upsizing and competitive discounting

    Q4 showed 10.5% India volume growth but only ~6% revenue growth due to upsizing (250ml→400ml) and competitive discounting. Management expects volume growth to offset in peak season. — Analyst acknowledged

    medium

    Weather dependence remains high for peak season performance

    CY2025 was worst year for rainfall impacting peak Q2/Q3. India volumes grew only 2.2% in first 3 quarters. Management's double-digit target contingent on normal weather. — Both acknowledged

    high

    40-45% capacity added over 2 years largely underutilized; 4 greenfield plants adding costs without proportional revenue

    Employee costs up 22% YoY partly due to new plant staffing. Depreciation up 28.4%. Expected to convert to operating leverage with volume recovery. — Both acknowledged

    medium

    Competitive intensity increasing with capacity additions across industry

    Discounting was rampant in Q4 when stocks didn't liquidate. Management sees discounting easing as CY2026 season opens. — Management acknowledged

    medium

    Areas of Evasion(2)

    • Distribution network data deliberately withheld citing competitive reasons
    • Twizza financials not disclosed

    Q&A highlights

    3

    “the upsizing has been done...we focused on the market and upsized packs. In the peak season, the volume increase will offset any cost”

    India volumes grew 10.5% in Q4 but revenue only ~6%, reflecting upsizing (250ml to 400ml at Rs 20) and competitive discounting in off-season

    asked by Latika Chopra (JP Morgan)

    1 min read4 chapters

    Detailed Narrative

    01

    Weather-Impacted Year but Q4 Recovery

    CY2025 saw unprecedented🌐 year-round rainfall impacting India's peak beverage season. India volumes grew only 2.2% for the first 3 quarters but recovered to 10.5% in Q4. Despite the challenging year, EBITDA margins held at 23.3% (India standalone ~26%, all-time high) thanks to cost discipline. 4 new greenfield plants added costs without proportional revenue utilization.

    02

    Strategic Capacity and International Expansion

    Rs 45,000 million CAPEX capitalized in CY2025 including 4 India greenfield plants and international brownfield expansion. 40-45% capacity added over 2 years provides significant headroom. Twizza acquisition in South Africa adds 3 manufacturing facilities with backward integration, expected to increase SA capacity by 70-80% and be margin accretive. Entry into alcoholic beverages via Carlsberg partnership in Africa.

    03

    Product Portfolio Diversification

    Snacks business reached Rs 340 crores with Morocco manufacturing operational since May-June 2025 and Zimbabwe just started December. Management targets $100M revenue medium-term. New product launches for CY2026 season include Ad Rush mid-priced energy drink, Nimbooz Jeera (juice-based at 5% GST), and expanded energy category. Rs 10 price point launched surgically in WB and NE, limited to 5-7% of portfolio.

    04

    Capital Allocation and Balance Sheet Strength

    India business net debt-free with Rs 12,250 million free cash. Consolidated net debt near zero at Rs 256 million. CRISIL upgraded to AAA/stable. CY2026 CAPEX will be minimal in India with no new plants; focused on Twizza acquisition payment and one SA brownfield. Board recommended Rs 0.50/share final dividend with potential increase if season goes well.

    This is an AI-generated summary of a publicly available earnings call transcript. It is for informational purposes only and does not constitute investment advice, a recommendation, or an endorsement. inve.money is not a SEBI-registered investment advisor. Please consult a qualified financial advisor before making any investment decisions.